LONDON (6 October 2025) – Model portfolios (MPS) dominated sales in the UK financial adviser distribution channel in the first half of 2025, new data from ISS Market Intelligence (ISS MI) reveals.
Total net model portfolio sales hit £7.8bn in H1, accounting for 44 percent of gross investment fund sales in the first six months of the year.
Unitised multi-asset funds outside of MPS also enjoyed strong demand, attracting £1.2bn in net sales, and achieving the biggest year-on-year increase across all solution categories.
By contrast, net sales of single-strategy funds outside of MPS struggled, recording net outflows of £3.1bn in the first six months of the year.
Benjamin Reed-Hurwitz, Head of Research Development, EMEA & North America at ISS MI, said: “The realignment of the adviser market towards multi-asset solutions is unmistakable. Model portfolios in particular have become the preferred vehicle for advisers seeking to combine efficiency, cost-effectiveness and consistent outcomes for clients. MPS providers’ ability to streamline the portfolio construction process at an attractive cost, thus allowing advisers more time to focus on client relationships and practice management, is a major driver behind their adoption.”
Gross sales of active and passive funds through MPS were evenly split in H1, highlighting the balanced nature of portfolios.
Reed-Hurwitz added: “Advisers are increasingly searching for solutions that can balance low costs with alpha generation and differentiation.
“Since Liberation Day earlier this year, volatility has remained top of mind for both advisers and investors. That has created a window for strategies that offer differentiated exposures, particularly within portfolios that use broad-based indices as their core.”
Within model portfolios, global and North American equity funds led the way for active strategies, while strategic bond, target absolute return and specialist sectors also recorded strong inflows.
He continued: “Strategic bond funds are having a moment in the sun. With so much uncertainty surrounding the future path of interest rates, advisers are becoming increasingly comfortable outsourcing credit decisions to managers who have a flexible mandate to navigate shifting conditions.”
Meanwhile, unitised multi-asset funds continued their turnaround that began last year after concerns over punitive capital gains tax (CGT) changes emerged. Net sales of these funds have been driven largely by advisers dedicated to the solution, with £2.7bn of net sales from IFAs whose sales comprised 50 percent or more of these products.
Low-cost strategies remain a major theme, with multi-asset funds that have an Ongoing Charge Figure (OCF) below 40 basis points (bps) achieving net sales of £2.5bn in H1. However, demand remained steady for solutions across the pricing spectrum, with funds charging above 40 bps still accounting for 45 percent of gross sales.
Reed-Hurwitz concluded: “As with MPS, advisers are increasingly constructing portfolios that blend passive and active approaches. This leaves significant headroom for fund managers who can deliver a differentiated multi-asset proposition – whether that’s through innovative allocation, specialist expertise or a proven performance edge – along with lower cost solutions.”
On the surface, single strategy funds are struggling to attract investor funds. However, ISS MI’s analysis shows there is still a dedicated segment of advisers committed to this approach.
Among IFAs where single strategy fund sales outside of MPS account for over 50 percent of total fund sales, net inflows were close to £2bn. This contrasts sharply with net outflows of nearly £5bn outside of this segment. Within this group, active funds remain dominant, although their share is declining. At 69 percent of gross sales, Target Absolute Return strategies performed particularly well during the quarter.
Reed-Hurwitz added: “Overall, the adviser platform market is being driven by the twin forces of value and differentiation when it comes to portfolio construction. While cost-consciousness continues to fuel passive adoption, advisers still want portfolios that stand apart from the pack. For those partnering with advisers, differentiated offerings can come through price, service models or portfolio management. Competition remains hot for advisers’ attention, and segmentation of advisers by preference has become essential to making sure the right solutions are reaching the right advisers.”
For more information and to access the full report, visit: https://www.issmarketintelligence.com/solutions/marketsage/uk-retail-advice-report/
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